A project with an estimated cost of INR $100$ Crores is getting commissioned with a debt equity ratio of $70$:$30.$ It will take $4$ years to complete. The details of the project along with per year investment is shown below. $(04)$

DETAILS FOR WORKING OUR IDC

PARTICULARS

DETAIL

Estimated Cost

$100$ Crores

Debt: Equity ratio

$70$:$30$

Time schedule

a$.$ First year

$20$ crores

b$.$ Second year

$30$ crores

c$.$ Third year

$30$ crores

d$.$ Fourth year

$20$ crores

RATE OF INTEREST

$10\%($simple interest$)$

Isolate the debt component and calculate the Interest during construction $($IDC$)$ under two scenarios.

Scenario$-1$: Assumption is that the debt shall be availed at beginning of the project, say January, every year and interest will be paid, past and present, at the end of each year. Calculate the interest of every year and total IDC in total $4$ years.

Scenario$-2$: Assumption is that the debt shall be availed in June of First year and interest will be paid, past and present, in June each year. Calculate the interest of every year and total IDC in total $4$ years.

How much is the likely benefit in the scenario$-2$ option? What the ways and means of further reducing the cost of IDC? You may take assumptions and formulate strategies.